Of course, it's a good thing that Christie is finally sending some funds Camden's way after years of neglect.* But why the wait? Especially when there always seems to be plenty of money available for charter schools in Camden (behind a paywall):

An extended rally in municipal bonds is helping Gloria Bonilla-Santiago grow the Camden, N.J., charter-school network she founded in 1997.

Although charter schools are among the riskiest municipal borrowers, and the city of Camden struggles with poverty and crime, Dr. Bonilla-Santiago was able to raise $10 million in a September bond sale. The money will enable her LEAP Academy University Charter School to expand its campus into the Wilson Building, a 12-story downtown landmark, adding a new cafeteria, fitness center, science labs and a health clinic.

“It’s a big responsibility, but there was an opportunity in the market to be able to sell bonds at a good rate,” Dr. Bonilla-Santiago said. [emphasis mine]

If you know anything about Camden and its schools, you'll know that this is quite a story -- a story that shows, once again, that charter schools play by a completely different set of rules, often to the detriment of public schools.

Let's start with some background: I spent a lot of time last year telling the story of Camden's LEAP Academy University Charter School and its founder, Gloria Bonilla-Santiago. The tale is long and twisted, but let me give the quick highlights:

LEAP actually lost its tax-exempt status for a while in 2013 because it failed to file its tax returns. This was serious because $8.5 million in bonds had been issued from the Delaware River Port Authority for the school's expansion. LEAP eventually got its tax-exempt status back, but not before blaming the debacle on the IRS.

But the failure to file taxes for three years was the least of the questionable behaviors surrounding LEAP. The school illegally recruited athletes back in 2005, leading to a severe sanction from the NJISAA. The school engaged in unfair labor practices, leading to extraordinary levels of teacher turnover. LEAP had to repay the NJDOE when it used federal funds for non-allowable expenses. A LEAP employee filed a lawsuit, claiming he had been forced to do personal work for Bonilla-Santiago at her home (I can't find any follow-up reporting on the status of this suit).

But perhaps the biggest scandal coming from LEAP came from the Philadelphia Inquirer's reporting on Bonilla-Santiago's live-in boyfriend, Michele Pastorello:

When Camden's LEAP Academy University Charter School compelled its new food-service management company to retain the school's executive chef and give him a $24,000 raise, LEAP also had to pay a $151,428 penalty to its previous vendor, documents show.

Including Michele Pastorello's new $95,000 salary, LEAP has spent nearly $250,000 this school year to keep him employed as executive chef. The position typically pays about $40,000, according to industry experts.

Pastorello is the live-in boyfriend of LEAP founder and board chairwoman Gloria Bonilla-Santiago. His raise, as well as the fee paid to the previous management company, Aramark, now are under review by the school's board of trustees. [emphasis mine]

One thing to understand about Bonilla-Santiago: in addition to her extensive connections at Rutgers-Camden, she is in tight with the South Jersey Democratic Machine of George Norcross. When the NJEA went after Norcross on public employee benefits "reform," Bonilla-Santiago stood at his side.

In return, LEAP has been the subject of much adulation from the reformy types across New Jersey. Bonilla-Santiago herself is quite shameless in wagging her finger at others while promoting herself, going so far as to publish a book this summer, The Miracle on Cooper Street. Yet she never quite seems to get around to acknowledging things like this:

The scatterplot here shows Grade 8 proficiency in English Language Arts for Camden's schools, plotted against the percentage of special education students the school serves. Yes, LEAP gets good test scores, but it also serves far fewer students with special education needs than the Camden Public Schools. You'll notice the charter schools, in red, all serve smaller proportions of students classified with special education needs.

That extends to other student characteristics. Here are some graphs from my report with Julia Sass Rubin on NJ's charter schools:

Without question, LEAP serves many more children who qualify for free lunch than the more affluent suburbs. But compared to the rest of Camden, LEAP's FL population is relatively small -- the fourth smallest in the city.

These are the aggregate demographics for Camden's charter versus public school populations. Notice Limited English Proficiency (LEP): LEAP's student body is 4 percent LEP, while Camden's is 9 percent.

LEAP serves a substantially different student body than the Camden Public Schools. We can argue about whether that's acceptable or not, certainly acknowledging that LEAP's student body has far more children in economic disadvantage than its suburban neighbors. But let's get back to those bonds...

Because what I don't understand is why there is plenty of money ready and available for charter schools like LEAP -- which serves fewer children with special needs -- to expand, while its neighboring public schools in Camden have to wait years just to get enough funding to keep from falling apart.

Why is Wall Street so eager to give a school like LEAP -- a school with a history of not filing taxes, engaging in unfair labor practices, and paying favored employees far more than market wages -- money with which to expand? So eager that, according to this Wall Street Journal story, LEAP is getting a remarkably good deal?

The school is paying a rate of 6.3% on longer-term debt. Comparable borrowing costs in 2009 were about 7.6%, according to the Local Initiatives Support Corp., which advises charter schools on finances.

Do you think that maybe the street came to a conclusion about LEAP? That maybe it doesn't need to jack up interest rates for their bonds, because -- as the school's history shows time and again -- it simply can do no wrong? That there is absolutely no chance the school will default on its obligations, because its plugged-in founder has many powerful friends who will be sure to protect bond sellers' investments, no matter what happens?

Investors’ rising appetite for muni bonds is a boost for charters, which are typically nonprofit, publicly funded and run independently from local school districts. Charter schools, which educate about 2.6 million students in the U.S., issued about $1.64 billion of debt this year through Oct. 5, more than the record volumes from all of last year and the year before, according to a report by Charter School Advisors and the LISC.

The ramp-up in charter schools’ debt sales comes as mainstay municipal issuers cut back amid postrecession belt-tightening by public officials. They are attracting yield-hungry investors who have pushed into riskier debt in search of better returns amid low interest rates.

Investors consider charter-school bonds to be riskier than conventional school-district debt because charter schools’ primary funding is per-student payments from the state rather than local property taxes. That makes it hard for charters to finance buildings or renovations without tapping outside sources like donors or the bond market.

Oh, puh-leeze -- what a load of malarky! There is no practical risk in selling bonds to charter schools like LEAP, which is politically connected and guaranteed a steady stream of students whose families don't want to send their children to crumbling, dangerous, underfunded schools.

So long as investors are willing to stay away from the real skunks in the charter sector, they are going to do very well investing in charter school growth:

John Miller, co-head of fixed income at Nuveen Asset Management LLC, said he has been “pretty aggressive” about adding charter-school bonds, and now holds about $1.4 billion, the majority of which are in the Nuveen High Yield Municipal Bond Fund, which has returned more than 18% this year. Safely investing in the sector requires analysis and legwork, even visiting the schools, he said. That means the market doesn’t necessarily price the bonds efficiently, creating an opportunity to find bargains.

“I’ve heard people say ‘I can’t get my arms around the idiosyncratic risk here,’” Mr. Miller said. “But there are returns to be had for actually doing that.”

No doubt. And if the consequences for these "returns" are screwing the students who aren't enrolled in charters -- and just happen to have more special needs -- well, that's the way the public school crumbles:

Meanwhile, the growth of charters poses an increasing risk for public school systems in cities such as Philadelphia, Cleveland and St. Louis that compete with them for students and state money, according to a report by Moody’s.

Students’ flight to charters has helped reduce the Philadelphia district’s underlying credit rating to junk, which is defined as below BBB- or the equivalent, though investors are protected by a state program that can withhold district funds for bondholders, Moody’s said.

Well, thank the lord we can withhold funds for schools so bondholders won't ever have to take a haircut...

This is the plan, and it's being enacted in Camden, and Philadelphia, and Newark, and Texas, and Florida, and New York, and Chicago, and many other places across the country:

Starve the urban public schools so their infrastructure begins to crumble and they become increasingly dysfunctional.

Create a charter school escape hatch for some families -- families that have children with fewer special education needs and can adhere to a strict "no excuses" school culture that would never be tolerated in the suburbs.

Suck up taxpayer funds, all while cutting expenses by making teaching a temporary "profession" through constantly churning staff (I'm going to have much to say about this later, but for now, read this).

Now, I know I'm just stupid teacher-blogger who don't know nothin' 'bout no high finance and such. I'm sure there's some right-wing rationale for all this that I missed seeing on Fox News. But here's what I keep coming back to:

Instead of enriching Wall Street plutocrats by giving them taxpayer funds to build new charter schools that don't educate all children...

Why don't we, instead, tax these people more and use the money to fix the existing public schools that serve every child?

Governor Christie's held a press conference today to announce $50 million to rehabilitate and renovate Camden High School.

The Governor did not mention that this is less than half of the $110 million that Camden High was slated to receive for renovations in 2011, but that Governor Christie cut.

The political lesson?

Cut funding. Wait a couple of years. Give a small part of the money you cut back. Claim to be doing something really great for the community you have shorted.

PS: The President of the Camden High Alumni Association and a Camden community activist were forcibly removed from the press conference by the Camden County Police, on the instructions of Novella Henson, Camden Mayor Redd's Chief of Staff, before the Governor arrived. They were told the event was by invitation only. They had not said or done anything to provoke being removed.

The press in attendance at the event was not allowed to ask any questions, only to take photos of the Governor and Camden children in the same room.

The Ministry of Truth does not tolerate having its press conferences interrupted...

Saturday, December 27, 2014

How about one more round of charter school myth-busting before the end of the year?

Richard Whitmire is the man who brought us the legend of Michelle Rhee, educational miracle worker of Baltimore and Washington. His biography of the blessed Saint Michelle of Arc, The Bee Eater, naively swallowed whole Rhee's buzzing claims about her test score gains while she was a teacher -- gains G.F. Brandenburg later debunked definitely.

Keep in mind the level of rigor Whitmire demands from himself, then, as we read his latest paean to charter schools inUSA Today:

Big-city school superintendents warrant their own "tough jobs" TV show. On average, they cycle out every few years — the result of a hard job made harder by charter schools appearing to outperform them.

Some react by accusing those charters of cheating. New York City schools Chancellor Carmen Fariña is one. Recently, she insisted that charter schools, which are publicly funded but privately managed, achieve better results only by pushing out "bad" kids.

Fariña and the mayor who tapped her, Bill de Blasio, are national leaders of the surging progressive movement, so her words quickly confirmed the beliefs of hundreds of school superintendents and union leaders who assert the same: Charters cheat, so let's stop them.

Some charter schools do have too-high suspension and expulsion rates. But those rates explain little about why these charters succeed. What really matters are attrition rates — students who actually drop out. After all, if you get suspended but return, maybe that's not a bad thing.

Take Boston's high-performing Brooke Charter Schools as an example. The suspension rate there is 20%. Sounds high, but the attrition rate is only 5.5%.

"We use suspension to help draw clear lines about the responsibilities all members of our school communities have to each other," says Brooke founder Jon Clark. [emphasis mine]

Is it true? Do only 5.5% of the students at Brooke Charter Schools "actually drop out"? Has this vaunted school found the magical, chartery "secret sauce" that keeps urban students enrolled and achieving excellence -- without dropping them if they can't get with the program?

Let's start with this: Brooke Charter does, indeed, have an attrition rate around 5.5%. Brooke is actually a small chain of three charters, and the attrition rates (available from the MA Department of Elementary and Secondary Education) for the schools are 5.6, 6.9, and 4.7 (percent). Which must mean, according to Whitmire's construction, that only about 5-and-a-half percent of Brooke's students "actually drop out." Right?

WRONG.

Notice that Whitmire gives his own definition of attrition -- "students who actually drop out" -- but he never tells us how the MA Department of ESE defines attrition. And that actually matters quite a bit:

Attrition Rate:: The percentage of attrition by grade from the end of one school year to the beginning of the next for students enrolled in public schools, including charter schools, in the state.

data as of: SIMS End of Year collection of one year and the SIMS October collection of the next year. For example, the Attrition Rate report for 2012-2013 reports on the enrolled students in SIMS End of Year 2012 who did not remain in the same district, or school, as of SIMS October 2012.

Catch that? "Attrition," as defined by the state, is the summertime loss of students; in other words, attrition, as defined by Massachusetts, is the percentage of kids who finished in the spring, then didn't come back to the same school the next fall. Attrition is not, in any, meaningful way, the number of students who "actually drop out."

What Whitmire does here is very slick, but ultimately deceptive: he's talking about "students who actually drop out," but he's not giving us any relevant data to back up his claim.

Let me see if I can help.

I used enrollment data from the state's Statistical Reports. Out of the three charters in the Brooke chain, only school #0428 had enough data for me to make this chart. I took last year's 8th Grade class (which will graduate high school in 2018) and followed them from Grade 5 through Grade 8, counting the number of students in each grade along the way. I then did the same for the last six classes to pass through Brooke.

Yes, I'll admit this isn't perfect: we don't know how many students were "backfilled" in each class, meaning they came in and took the place of other students who left. Still, this gives us a much clearer picture of the "students who actually drop out" than Whitmire's summertime attrition rates.

Uh-oh -- looks like there are quite a few "students who actually drop out" of Brooke. In fact, I'd say the number is a good deal higher than 5 percent:

I'll say what I always say when I do this sort of analysis: absent any further evidence, I am not accusing Brooke of kicking out kids. I simply don't know why or how this cohort attrition occurs -- I only know that the classes are shrinking.

Further, in the absence of any evidence to the contrary, I am happy to concede that Brooke is a fine school, full of dedicated teachers and deserving students. They should be proud of their school and proud of their work.

No, once again, my problem isn't with the charter schools themselves; my problem is with the charter cheerleaders, like Whitmire, who keep us from having a serious conversation about what is really ailing our urban schools. They do the students and parents of cities like Boston no favors by continually selling myths about charter school superiority.

As 2014 draws to a close, I ask the charter school sector to start policing itself. You have many good people who, I believe, truly care about disadvantaged students. Many of you work in fine schools. But you're not miracle workers, and it's well past time you started admitting it. You ought to distance yourself from the shoddy work of pundits like Whitmire who continually misuse data to make claims that are at best inflated and at worse just flat out wrong.

ADDING: EduShyster was hip to Brooke's attrition rates a couple of years ago:

Well that seems perfectly obvious. Let’s try that again, shall we? Start with 47 sixth graders, subtract 30 and you end up with… Got it! $1.5 million. Did I mention that closing the achievement gap is the civil right$ i$$ue of our time?

Ye$, you did...

ADDING MORE: One other simple point that often gets lost in the charter school wars:

In 2013-14, the three Brooke charter schools enrolled a total of 1,140 students.

The Boston Public Schools, in contrast, enrolled 54,300.

Doesn't that data point by itself suggest a little more caution is warranted before calling for increased charter school proliferation?

Friday, December 26, 2014

Laura Waters tells us that the stress teachers and principals are feeling over expanded standardized testing, like the PARCC, just isn't a problem for the wee ones:

Will NJ’s “toxic testing” movement peter out after the state’s teachers, students, and schools survive their first year of PARCC standardized tests?

If only it were so simple. Some of the opposition to the PARCC tests stems from concerns about overtesting kids. These tests are a little longer than New Jersey’s old standardized tests, and more challenging because they’re aligned with appropriate grade-level expectations. But the real hostility towards PARCC is driven by accountability measures embedded in the state’s 2012 TEACHNJ law. This legislation ties student outcomes on standardized tests to teacher and school evaluations. The assessments aren’t high stakes for children, but they’re high stakes for teachers and schools. That’s a basic premise of education reform: public schools should be responsive to the public and responsible for results. [emphasis mine]

"Responsive to the public" apparently doesn't mean giving every community local control over its schools. That's a privilege we reserve for districts with certain, shall we say, demographics...

But we've been over that point quite a bit on this blog; let's spend some time examining this other claim. Is it true that statewide, standardized tests "aren’t high stakes for children"?

To start: even Waters acknowledges that the tests are high-stakes for teachers and schools. The results are used to target schools for accountability measures, even if the results are racially and socioeconomically biased (in part because the tests themselves are racially and socioeconomically biased). This means, as in Newark, schools can be forced to be "renewed" or turned over to charter school operators on the basis of test scores. It's silly to pretend this isn't a high-stakes outcome for children.

Further: let's not delude ourselves into thinking children don't feel pressure when their teacher's livelihood is on the line due to a standardized test. SGPs may be biased and noisy measures of teacher effectiveness, but that hasn't stopped the state from using them to hold teachers "accountable." This has a profound effect on a child's classroom -- how could it not?

But let's set aside these indirect but still meaningful effects and ask instead: are there direct effects on students from the increasing emphasis on standardized testing?

The answer, unquestionably, is yes. Off the top of my head, I can think of three big ways in which statewide standardized tests like the NJASK or the PARCC profoundly affect the lives of our public school students:

1) Placement into advanced courses. Because standardized tests have a patina of objectivity surrounding them, administrators often use them as assessments for children to gain entry into higher-level courses. Here's an example from -- surprise! -- Laura Waters's own district, Lawrence Township, where she currently serves as vice-president of the board of education.

Dear Parents and Guardians:

We would like to welcome you and your child to Lawrence Middle School!

Unlike other academic disciplines offered at LMS, there are different math courses for student placement. In mathematics, understanding and competency in foundational skills is essential for success in the next course within a sequence and in higher math classes. A sequence of classes has been established to help ensure student success throughout their math career and preparation for standardized tests. LMS Math courses are aligned to the Common Core State Standards. Student placement is based on specific placement criteria indicators.Placing a student in a class that they are ready to receive instruction is paramount to their current and future success, as well as, concept understanding and application. All math classes at LMS include skills and concepts addressed on the NJASK, a required state assessment, along with course specific skills. The curricula are rigorous and designed to challenge students at an appropriate level related to their abilities as demonstrated by his/her performance indicators. Pushing students beyond their readiness level may impact their understanding of essential prerequisite skills and hinder their success. Students must complete pre algebra before they can enter into an algebra course. Below is a summary ofkey performance indicators used for placement and a possible math career progression for students as they enter LMS and high school. [emphasis mine]

Certainly, Lawrence uses multiple indicators to grant students placement into the higher math tracks. But what do you think the chances are of a student who is not "proficient" on the NJASK/PARCC getting into advanced math?

If I'm reading the charts on this page correctly, it's nearly impossible for a Lawrence student to get into AP Calculus in Grade 11 unless they were in advanced math in Grade 6. And students who take AP Calc that early undoubtedly have an advantage in their college applications.

If you're a student in Lawrence, you want to do well on the NJASK/PARCC; your future will definitely be affected by your score.

2) End-Of-Course Testing. The new PARCC tests are replacing the old HSPA as the standard requirement for graduation (the transition has been more than a little bumpy). But they are also serving as "end-of-course" tests in math and language arts. Which means districts are starting to move away from giving their own mid-terms and final exams, and toward prepping more for the PARCC.

Frankly, I find this as weird as the practice of eschewing finals for taking the AP exam, because the results of the tests don't come back until after a final grade is issued. Which means a student can take AP Biology, get an "A" in the course, but only get a "2" on the exam (conversely, that student could get a "D" in the course but score a "5" on the test).

We'll have to see how high schools deal with this; we'll also have to see if the trend creeps down to middle schools. In any case, replacing finals and mid-terms with the PARCC certainly makes it a high-stakes assessment for students.

3) Self-image. As a lifelong educator, I'm going to claim some authority to argue this point. Children -- particularly young children -- take these tests seriously, and their self-image is inevitably affected by the results.

It turned out that there were indeed educational policies that vary from state to state that link to the rates of ADHD diagnosis.

Specifically, Drs. Hinshaw and Scheffler's team found a correlation between the states with the highest rates of ADHD diagnosis and laws that penalize school districts when students fail. Some of these laws are what they call "consequential accountability statutes"—that is, laws like No Child Left Behind, which make school funding contingent on the number of students who pass standardized tests. Another kind of accountability law passed by many states requires exams for high school seniors to qualify for graduation.

"In 2001, No Child Left Behind put the whole country on notice that districts are accountable for scores," Dr. Hinshaw notes. "But if you go back two decades earlier, in the early 1980s, some states got on the consequential assessment bandwagon earlier or the high school exam bandwagon earlier."

What the team found is that in states that enacted these measures early, within a couple of years rates of ADHD diagnoses started going up, especially for kids near the poverty line. This isn't surprising as the diagnosis helps the school comply in several different ways, Dr. Hinshaw notes. If kids who are struggling with ADHD get treated, it should improve their functioning in school and hence their test scores. But it's also the case he adds, that in many jurisdictions, if you get an ADHD diagnosis your test scores don't count. And, of course, there's an added bonus that, since kids with untreated ADHD are often disruptive in the classroom, getting them to settle down (or sending them to segregated classrooms) could have positive impact on a whole class—and that class's test scores.

In other words: When schools are given financial incentives to improve student success rates, students are more likely to be diagnosed with ADHD and given medication to treat it. [emphasis mine]

I can't think of a higher stake for a student than being saddled with a diagnosis that requires a years of brain-altering medication. What a powerful impact this must have on a child's sense of her self.

The issue certainly deserves more than Waters's insouciant take on the matter:

While NJEA was temporarily appeased and even took credit for the compromise, Save Our Schools and other Tea Party groups were outraged. Currently a number of suburban bargaining units are sponsoring opt-out tutorials for parents who have the means to keep kids home on testing days and the NJEA is hosting an opt-out page on its website. However, my guess is that the antitesting fervor will diminish by the end of 2015 after everyone emerges unscathed by the first implementation of PARCC. Look: students take tests. Teachers prepare students for tests, even new assessments that require mastery of meaningful standards. It’s called school.[emphasis mine]

Yes, it is. But as the reformy keep telling over and over, school has a profound influence over a student's life. And if standardized testing increasingly defines how well a student performs, it stands to reason that a student has a greater stake in the results of that test.

So let's not pretend the expanded testing regime being foisted on our schools is nothing more than a passing concern for our children. These tests most certainly come attached with high stakes for our kids.

And our students deserve better than breezy denials of this reality.

"It's called school."

ADDING: Some folks on social media are pointing to this sentence from Waters:

While NJEA was temporarily appeased and even took credit for the compromise, Save Our Schools and other Tea Party groups were outraged. [emphasis mine]

Full disclosure: SOSNJ is hosting the NJ charter report I wrote with Julia Sass Rubin, one of the founders. Maybe you agree with the group; maybe you don't. That's fine...

But to conflate SOSNJ with the Tea Party is simply ridiculous. In no way, shape, or form is SOSNJ even remotely related to the Tea Party. Yes, they may both oppose things like the PARCC, but they do so for completely different reasons.

Calling SOSNJ a "Tea Party group" is like saying Mets fans are really Yankee fans because they both love baseball and come from New York. As any fan of one or the other ball club will tell you: the differences far outweigh any similarities.

Monday, December 22, 2014

Via the blogging machine that is Peter Greene, we find a new and disturbingly illiterate letter from NY Governor Andrew Cuomo's State Operations Director, Jim Malatras. The Times-Union has the original on line; it's mostly a Jeopardy-style (form of a question) laundry list of Cuomo's reformy policies, with an occasional cheap shot thrown in every now and then at teachers and their unions for failing to solve every social and economic problem facing the Empire State.

Peter neatly deals with the stupidity that is the Cuomo education policy agenda -- more charter schools, test-based teacher evaluations, tenure, merit pay, mayoral control, etc. -- so I'll leave that alone for now. Instead, let's take a moment to bask in the self-righteousness that is the world of the Son of Mario:

Several weeks ago Governor Cuomo said that improving education is thwarted by the monopoly of the education bureaucracy. The education bureaucracy's mission is to sustain the bureaucracy and the status quo and therefore it is often the enemy of change. The result is the current system perpetuates the bureaucracy but, [sic*] fails our students in many ways.

Tackling these questions with bold policy and leadership could truly transform public education and finally have it focus on the student as opposed to the bureaucracy. [emphasis mine]

You'll remember, of course, that the Son of Mario suffers the little children better than anyone else; just ask him if you doubt it. So when he sends out his hack to take on the education "bureaucracy" (cough, cough, *UFT*, sniff...), understand it has nothing to do with the petty, vindictive war he's waging against NYSUT because they refused to get in line and endorse him in the last election.

Oh, no, and how rude of you to suggest such a thing! The Son of Mario is pushing his reformy, evidence-free agenda because his "bold" style of leadership demands he do so! Except that the one thing that could actually help New York's students -- the most important issue facing the state's schools -- isn't even mentioned in Malatras's letter:

December 1, 2014

Lawsuits brought by students in New York’s small cities school districts and New Jersey’s rural districts challenging unfair funding are poised to advance in early 2015. The lawsuits raise the failure of Governors Andrew Cuomo and Christopher Christie to adequately fund school funding formulas in the Empire and Garden States, respectively.

Education Law Center is serving as co-counsel in both lawsuits. Below are brief summaries of the cases and court schedules.

Maisto v. New York

In this lawsuit, students in eight, high poverty, “small cities” school districts assert that their schools are deprived of the teachers, support staff, programs and services deemed “essential” to afford them a “meaningful high school education,” the standard for a “sound basic education” under the New York Constitution as previously established by the Court of Appeals, the state’s highest court.

The students are prepared to demonstrate that the lack of essential education resources is caused by large shortfalls in state school aid due to the Cuomo Administration’s refusal to fund the state’s Foundation Aid Formula. The Formula was enacted in 2007 to respond to the Court of Appeals ruling in the Campaign for Fiscal Equity case. The NY Legislature put the Formula in place to ensure sufficient state funding to provide essential resources for all students to have the opportunity for a sound basic education.

The students in the Maisto case attend school in Utica, Poughkeepsie, Jamestown, Mount Vernon, Kingston, Newburgh, Port Jervis and Niagara Falls. The trial is set to begin before Judge Kimberly O’Connor on January 21 in Albany. While the trial involves only eight school districts, the decision in the case could impact the State’s obligation to address the approximately $5 billion shortfall in Foundation Formula funding for students across the state.

Visit the ELC website for more information and updates on the Maisto litigation. [emphasis mine]**

A very short history lesson is in order here:

In 1978, a group property-poor school boards filed Levittown v. Nyquist, a challenge to the
New York State school funding system. While the plaintiffs’ claim was ultimately dismissed, Levittown did establish that
NY State students have a right to a “sound basic education.” In his dissent,
Justice Jacob Fuchsberg, wrote: “... (it is an) undisputed fact that the
existing education aid formulae have an adverse effect, not only on pupils from
impoverished families, but also on a large percentage of the nearly 750,000
minority students (Blacks, Hispanics, American Indian, Asian, and others).”

By invoking a claim of disparate impact, Fuchsberg set the
stage for Campaign for Fiscal Equity
(CFE) v. State of New York, the landmark case that became the basis for New
York’s current funding system. CFE asserted in its complaint: “New York State
was failing in its constitutional duty to provide the opportunity for a sound
basic education to hundreds of thousands of its schoolchildren.”

In his 2001 decision, presiding Justice Leland DeGrasse
ordered the state to take the necessary measures that would ensure all public
schools provide the opportunity for a “sound basic education” to their
students. It took a few years, but eventually the state legislature enacted the State Education Budget and Reform Act of 2007-08.

The act set the groundwork for the Foundation Aid Formula, which was designed to take into account a district's student population characteristics and its ability to fund its education. As Bruce Baker*** notes:

The 2007 foundation aid formula was adopted by the state specifically to achieve
compliance with the high court’s order in Campaign for Fiscal Equity. The state argued that this
new formula was built on sound empirical analysis of the spending behavior of districts that
achieved adequate outcomes on state assessments. The state argued that the foundation
formula applied this evidence, coupled with additional evidence-basedadjustments to address
student needs and regional cost variation, in order to identify a specific target level of per pupil
spending for each district statewide, which would provide comparable opportunities to achieve
adequate educational outcomes. The state determined the share of that target funding to be
raised through local tax revenues and estimated the amount to be paid by the state toward
achieving each districts’ sound basic funding target.

Then, they simply failed to fund it. [emphasis mine]

Yes, that's right: after painstakingly putting together the formula, New York's political class said: "Yeah, uh... no." But it's not as if all of New York's districts have suffered equally: the wealthiest districts have spent much, even when they were supposed to be cutting their property taxes, while the poorest districts have had to struggle on far less than they were promised. This has made New York's State's school funding system, despite its relatively high amount of total spending, one of the most unfair education financing systems in the entire country.

Federal education officials have granted a year-old request from two upstate school districts to investigate whether New York's school aid system shortchanges districts with large minority populations.

In a Nov. 25 letter, the U.S. Department of Education said its Office of Civil Rights will probe the state education department and Board of Regents and the state's funding of schools.

But the agency decided not to include the executive and legislative branches, which actually decide on levels of school aid, as originally requested in a complaint last December by the Schenectady and Middletown districts.

"It's not the lever I wanted, but it's the lever we have," Schenectady Superintendent Larry Spring said the decision not to review the roles of the Cuomo administration or Legislature.

He said the agency decided it was limited to looking at the institutions that directly get federal education money.

The federal education department declined to comment beyond confirming the investigation and the state department said it wouldn't comment on an ongoing probe.

Spring said it took nearly a year and steady negotiations to get to this point because the investigation is novel and could have national consequences.

"This is something that happens across the country to black school districts," Spring said of funding gaps between rich and poor districts. "Black communities in this country are really being starved and it's not OK for government to look the other way." [emphasis mine]

No, it's not -- especially when the New York State itself has set the standard for school funding, then has refused to follow its own law.

I learned my most important lesson in my first year as Governor in the area of public education. I learned that everyone in public education has his or her own lobbyist.

Superintendents have lobbyists.

Principals have lobbyists.

Teachers have lobbyists.

School boards have lobbyists.

Maintenance personnel have lobbyists.

Bus drivers have lobbyists.

The only group without a lobbyist? The students.

Well, I learned my lesson. This year, I will take a second job — consider me the lobbyist for the students. I will wage a campaign to put students first, and to remind us that the purpose of public education is to help children grow, not to grow the public education bureaucracy. [emphasis mine]

Well, OK, then Guv: what's your stance on making your New York government follow its own laws? Where's that passion to "put students first" when it comes to school funding? What do you have to say about this critical and pressing issue?

Cuomo and state lawmakers have defended the way they allocate education funding. Cuomo's office did not respond to emailed request for comment about the federal investigation.

Wow, how "bold"...

Let's be very clear about this: Cuomo's reformy agenda is a distraction to keep New Yorkers from having a serious conversation about reforming school funding.

If Cuomo really wanted to help the at-risk children of his state, he could do something immediately that makes a real impact on school funding fairness. The Foundation Formula includes a provision that gives $500 per student to every district in state aid, regardless of whether the district is wealthy enough not to need it. According to Baker, this redirects about $1.25 billion in state aid away from poorer districts toward wealthier ones.

How about it, Governor Cuomo? You stand up all big and tough to the teachers unions; how about, just this once, taking a stand that might cost you some real political capital? Instead of sending your lackey out to waste our time on nonsense like test-based teacher evaluation, how about calling for an end to the $500 minimum in state aid and use the savings to put funds into the districts that need them the most?

How about going toe-to-toe with that part of the education bureaucracy, Governor? Let's see if you're "bold" enough to do that.

* As Peter points out: this is a horribly written letter. Yes, I'm a self-editing blogger and my writing often sucks, but this is an official document written by one of the governor's top aides -- and no one in his office knows how to use a comma? These are the people in change of setting the cut scores of the Regents Exams?

** Full disclosure: I have previously done research work for the ELC. What, you didn't read it? Well, go pour yourself some eggnog and curl up...

Saturday, December 20, 2014

David Sirota of the IBT has been doing stellar work on the conflicts of interest that have become a staple of the Christie administration. And no where is the skirting of ethics more brazen than in New Jersey's management of public employee pensions:

During today's meeting of the New Jersey State Investment Council, private equity executive Robert Grady announced he is stepping down from the chairmanship of the panel. Christie has called Grady a "friend of mine for nearly 40 years" whom he relies on for political advice.

In recent months, campaign finance documents revealed that under Grady’s leadership, the state has awarded lucrative pension management contracts to hedge fund, private equity, venture capital and other so-called “alternative investment” firms whose executives made campaign contributions to Christie's campaign, his state party, the Christie-led Republican Governors Association and the Republican National Committee. The donations included a $10,000 contribution from Massachusetts Republican Gov.-elect Charlie Baker to the New Jersey Republican State Committee just months before Baker’s firm was given a New Jersey pension investment.

The donations were made despite New Jersey and federal rules aiming to restrict contributions to state officials like Christie who oversee pension investment decisions.Documents uncovered by International Business Times showed that Grady, a former Carlyle Group executive, was in regular communication with Christie’s campaign officials at the time the campaign was raising money and he was overseeing the state's pension investments. Grady pushed New Jersey to move pension money into an investment in which his private financial firm was also investing, documents revealed. New Jersey also invested in Carlyle Group funds during Grady's tenure, though he recused himself from final votes on those investments.

New Jersey's largest union has filed a complaint with the state ethics commission about the donations, and New Jersey lawmakers are currently considering legislation to strengthen existing restrictions on campaign donations to state officials from firms managing state pension money.

Good luck with that one, guys: you can't even get Christie to agree to keep his promise to partially fund the pension according to a timetable he agreed to back in 2011.

As in so many areas of policy, Christie is nothing more than a tumbleweed of contradictions, blowing wherever the political winds take him. He rails against the pensions being far too generous, even though that is demonstrably untrue. But he has never come out and said he wants to shut them down; in fact, his plan so far has been to get public workers to pump in more money, against our wills, into the system.

There are two reasons for this. First, and most obviously, is that the system would collapse far faster if public employees are ever given the option to opt out of the system. I've made this offer a bunch of times, and I'll make it again: give me back my money and I'll get out of the pension. All the state has to do is pay me back what I put into the pension funds, with interest, and include what they were supposed to put in, with interest.

I'll renegotiate with my district to make up the lost compensation (the taxpayers of my district can take up with the state whether they want to continue to subside a pension that doesn't accrue to their employees). Then I'll manage my own retirement in cooperation with my district. Isn't that fair?

The problem, of course, is that the current retirees, to whom the state has a contractual obligation, need to be paid. No court in the land will ever allow an entire state to go bankrupt; in fact, the courts have even said Christie's attempt to take away the cost of living adjustments for current retirees is unconstitutional. If you can't even mess with COLAs, how can you cut payments themselves?

You can't. The truth is this state could easily raise taxes -- particularly on the wealthy and corporations, although that most likely won't do it all. But that would kill Chris Christie's presidential ambitions, and nothing comes before that, including rational and honest governance.

Which brings us to the contradiction on Christie's pension policy, and the second reason he won't call for phasing out the pensions. Because as much as Christie doesn't want to raise taxes, he and his Wall Street pals just love, love, love that great big pile of pension money, ripe for the plucking.

They just don't want to put in their share -- they'd rather have us teachers and cops and firefighters and state workers and municipal employees pony up more and more, all while they shave off larger and larger slices for themselves.

Which is why anyone who has been paying attention shouldn't be the slightest bit surprised by this:

When the New Jersey pension system terminated a $150 million investment in a fund called Angelo, Gordon & Co. in 2011, that did not close the books on the deal. In the three years since state officials ordered the withdrawal of that state money, New Jersey taxpayers have forked over hundreds of thousands of dollars in fees to the firm. As those fees kept flowing, Angelo Gordon made a prominent hire: Mary Pat Christie, wife of Gov. Chris Christie, who joined the company in 2012 as a managing director and now earns $475,000 annually, according to the governor's most recent tax return.

The disclosure that New Jersey taxpayers have been paying substantial fees to a firm that employs the governor's spouse -- years after state officials said the investment was terminated -- emerged in documents released by the Christie administration to International Business Times through a public records request.

A spokesman for the New Jersey Treasury Department, Christopher Santarelli, said via email that while New Jersey “ended its investment” with Angelo Gordon in 2011, the payments were legitimate because the state continues to hold an “illiquid” investment in the firm. Christie officials declined to disclose details of what exactly that illiquid investment is and the justification for continuing to pay fees to Angelo Gordon. The governor, Mary Pat Christie and executives at Angelo Gordon all declined to comment. [emphasis mine]

Now that is a conflict of interest so outrageous that even the Star-Ledger's Editorial Board took notice -- even if their response is, as always, to make excuses for the governor:

Only some perspective is needed here, starting with the fact that the original $150 million investment with Angelo, Gordon & Co. – a monolithic hedge fund, with tentacles that reach every corner of the investment world – was made in 2006 and closed in 2011.

The reason the fees keep coming is that a vestige of the original investment (about $6.5 million) is illiquid, which means it cannot be sold because there are no interested buyers. And while it may be suspicious that Mary Pat Christie’s firm won’t disclose details of the deal in question, industry experts will tell you that Angelo Gordon either has no obligation to reveal it, or it has a contract that mandates as much. [emphasis mine]

Oh, yes, let's take lessons in ethics and disclosure from the very industry that is screwing the taxpayers of New Jersey! Way to stand up for your readers, Star-Ledger!

I want to acknowledge one thing before continuing: many times, when the press reports on the business dealings of wives of powerful politicians, there is more than a little air of sexism surrounding the story. Back in the day, Hillary Clinton took heat for being a successful lawyer in her own right while her husband was governor of Arkansas; most of that was unfair (some, however, was rightfully questioned, in my opinion).

It's quite legitimate to question Mary Pat Christie's critics as to whether they are suggesting that she is not allowed to have a career separate from her husband's simply because he holds public office. That said: this case is so clearly tied to New Jersey's pensions and Chris Christie's policies that, at the very least, the deal should have been disclosed in real time the moment Mary Pat Christie took the job. Even the S-L agrees with that:

Yes, in an ideal world, disclosure is a tenet of good governance, and transparency is the best disinfectant.

Here comes the "but...":

But [see? -- JJ] while New Jersey is governed by someone who often thinks differently – check out his administration’s record on OPRA requests sometime – it’s hard to find the fire beneath the smoke in this case.

For starters, the fund was purchased by the State Investment Council three years before Christie was elected.

Which actually makes Mary Pat Christie's hiring even more suspicious. Why didn't the state just walk away from paying fees on the investment if it's "illiquid"? Because that would be "illegal"? It's no more illegal than reneging on promises made in statute to fund pensions, isn't it?

The a real question here is whether the hiring of Mary Pat Christie was a way to ensure the money kept flowing to her firm, even though the investment is now illiquid. It's a question Sirota asks -- because he is a real journalist -- in his article:

Spokesman Santarelli told IBTimes that while “New Jersey redeemed its interest in the AG fund and ended its investment [in 2011] we still have a remaining market value of $6.6 million invested related to illiquid investments, which have been winding down slowly over the last few years.”

“Either they don't want to accept a market price and recognize a big loss, or the investment is something so complex and exotic they can’t sell it at all,” she told IBTimes.

In all since 2006, state documents show New Jersey has paid more than $11.8 million in fees to Angelo Gordon -- more than the amount the state currently says it is projected to make on its investment in the firm. Former hedge fund manager Marshall Auerback told IBTimes that the outstanding illiquid investment is unusual.

"The obvious question here is, why is the Christie administration allowing fees to be paid to a financial firm for three years after the state terminated its investment?" Auerback, who is now an executive at the economic policy group Institute for New Economic Thinking, said. "This seems like a very one-sided deal for the manager. After three years, there doesn’t seem to be a time frame for selling the illiquid parts of the investment, and yet the manager gets to keep collecting fees. It's a great deal for Mary Pat Christie's firm, but a terrible deal for taxpayers and for the public employees whose pension money is being used to pay the fees."

Thomas Byrne, the Christie-appointed acting chairman of the New Jersey State Investment Council, countered that argument. "This is standard; we are not doing something different here that is outside the norms of the financial industry and the world of private partnerships," he said. [emphasis mine]

And that, of course, is exactly the problem.

One other point the Star-Ledger conveniently forgets: Chris Christie is chairman of the Republican Governor's Association, which means he now has influence over many state pension plans. What are Angelo, Gordon's interests in pensions located in states in which Christie was directly involved in gubernatorial elections?

This entire thing stinks on ice, even leaving Mary Pat Christie's part in it aside. Under Chris Christie, Wall Street firms are getting fat off of the mandatory contributions of public employees, all while our pensions continue to degrade in value. There is no transparency and no accountability in these investments, yet the state continues to take our money while attempting to slash our earned compensations.

This is perhaps the best reason for the NJ Legislature to insist that the wealthy start kicking in more to the pensions. Because maybe if these plutocrats started having to put their own money on the line, they wouldn't allow these sort of shenanigans to occur. Maybe if the wealthy had as much skin in the game as we public employees do, these sort of outrageous practices would cease.

In any case, it's well past time for public employees to start standing up and demanding that our money be managed responsibly and with full transparency. Chris Christie shouldn't be allowed to use our compensation to enrich his cronies without any safeguards in place to protect our interests.